Bernard Chew, NTUC Fairprice's first-ever CIO, is the man behind the supermarket's move to broadband. In this interview, he tells CNETAsia how the company broadened its bandwidth in a bid to modernize and stay competitive.
A supermarket unplugged: Bandwidth a means to an end?
When Bernard Chew joined NTUC Fairprice in January last year, his first priority was to implement an ultramodern supermarket.
Broadband paves the way for apps
Chew shares what it took for the company to move into a process that allowed real-time inventory and connected workforce.
About the network
A closer look at the high-speed network that the supermarket is now on.
NTUC Fairprice unplugged: Broadband a means to an end? When Bernard Chew joined NTUC Fairprice in January last year, his first priority was to implement an ultramodern supermarket.
Margins in the supermarket are razor thin and NTUC FairPrice can't simply raise prices as it's owned by a worker's co-operative. Instead, the supermarket giant needs to wring every last cent it can by operating with extreme efficiency.
So when Bernard Chew joined NTUC Fairprice in January last year as its first Chief Information Officer, he knew he had a big task ahead. Chew wanted to implement an ultramodern supermarket, like the ones he knew when he worked in Palo Alto, California. He wanted to be able to do real-time inventory, email-enable more employees, and implement an intranet and an Enterprise Resource Planning (ERP) system. He also knew he couldn't do it without upgrading his network infrastructure.
"The network is the foundation. If you don't have a good network, it's
game over," he said.
When Chew joined, the 67 supermarkets were linked to the Headquarters using 128K ISDN (Integrated Services Digital Network) lines. However, the line was flaky and costs were high because the company was paying per minute of usage. Some locations were spending more than S$500 a month on connectivity alone. He swiftly changed it over to 64K point-to-point leased line circuits and brought down the cost to S$250 per line.
This was a short-term solution, though, and Chew knew it. While costs had become more manageable, the pipe had become too small. A single email with a large attachement would instantly saturate the network. Because the bandwidth was too limited, everything had to be done in very carefully, in batches. Changes in price and information about new promotions were sent to the stores once a day, usually at night and during off-peak hours.
Likewise, sales data from the stores could only be sent back to Headquarters once a day. Once that might have been acceptable but the supermarket business in Singapore is a crowded scene with giant hypermarkets heating up the fierce competition.
To compete more aggressively, FairPrice needed to better manage supplies. That meant a new point-of-sales system and a fatter pipe.
Chew also wanted to improve information flow throughout the organization, so he put in a Java-based ERP system and Intranet in place. The slow connection made the advanced system frustrating for users, though. People would log on and try to work but their network requests would take so long that the connections timed out frequently. As a result, the ERP and intranets were underutilized.
He needed a better solution, and Chew was given S$500,000 to make it happen.
The solution was clear: more bandwidth. With the additional bandwidth, accessibility would improve and he could add new valuable/efficient functions such as real-time inventory. Bandwidth would be the foundation on which FairPrice would modernize to increase efficiency and profits.
Broadband paves the way for apps Chew shares what it took to move the company onto a process that would allow real-time inventory, a connected workforce and high-speed efficiency.
Once the decision was made, Chew decided to go with a solution from SingTel that would link each of the 67 stores via a 512Kbps ADSL (Asymmetric Digital Subscriber Line) link to a virtual private network (VPN). The VPN would be connected by a 45Mbps Asynchronous Transfer Mode (ATM) link to Headquarters.
Chew estimates that he spends little more than S$250 a month per ADSL connection. The ATM link costs S$10,000 a month. Once the system is rolled out to all 67 stores, the ATM cost would be spread out so the company would end up spending about S$400 a month per location for connectivity. He would end up spending more on connectivity than before, but in return he would get much more bandwidth. His stores would, in fact, see an eight times increase in bandwidth available. Now he has all the bandwidth he needs to roll out new applications.
The pilot deployment began in June with 10 stores. The rollout proper began in July and is slated to finish in September this year.
Fairprice managers can now use the Intranet fully to get up-to-date
information for the store. They can find out what items are on sale daily, weekly, or on special promotion, and they can do so throughout the day. They can find out which items are currently out of stock, and view all sales by category.
Using the ERP system, the managers can also do item replenishment,
receiving, goods return, stock transfers, write-offs, stock takes, and make enquiries.
All this can be done during the day without the frustration of a slow network.
Chew's IT department is now working on an application to get real-time
inventory from his stores so that when needed, he can immediately find out the availability of goods in each store. This would be a massive leap from the current situation when such an inventory could be done only once a day.
Strictly speaking, the ability to obtain real-time data is more a function of having a new point-of-sales system than it is the greater bandwidth. However, obtaining that kind of data during the day would have required more capacity than the 64K leased line could provide.
Chew also plans to email-enable more employees. "Email is cheap these
Days," he pointed out. Rather than just the store managers, he wants the supervisors and chief cashiers to get email access as well so that the company can communicate with its key staff better.
He is also toying with implementing a tablet-type PC in each store as a
shared viewing device for staff. This will allow staff to view the company newsletter online and save the company money as it would no longer have to print and distribute a newsletter on paper. The device could also be used to distribute other notices quickly and easily.
Another project that Chew is enthusiastic about is deploying wireless pocket data terminals at each store to modernize the way supermarket
employees receive goods from suppliers. The aim is that when a truck rolls in with new goods, the employee can whip out a handheld terminal which is wirelessly connected to the company intranet. The employee calls up the purchase order from the intranet so he can check that he is receiving the right order. He then scans the barcode on each box or carton. This records that he has received those items in those quantities. The records are immediately updated on the intranet.
Currently, the procedure depends heavily on paper records and manual entry. When a truck pulls in, the receiving employee has to have a printed paper version of the purchase order downloaded to the store PC the night before. He has to then manually check the purchase order against the goods that actually arrive. The final tally of goods received has to then be manually updated into the system.
There are a number of significant flaws in the current process. If the
data gets corrupted when it was sent over, no one knows until they try to print it out. They then have to obtain an uncorrupted version again over a slow network. The process of manually checking the goods which arrive is slow, cumbersome and prone to human error. Finally, updating the records on the intranet after the goods have been received is also slow and prone to error as the information is transferred from paper to PC.
The wireless connectivity allows the employee access to the network while having the freedom to move about in the loading bay to check the goods coming in, but it is the availability of a high-bandwidth network that allows the employee to get Purchase Orders and send back a report of goods received, all in real time.
About the network A closer look at the broadband network that the supermarket is on.
FairPrice currently subscribes to a service by SingTel called Meg@Pop, a suite of business-class, managed IP services.
SingTel sells different types of access to its Multi-Protocol Label Switching (MPLS)-based IP VPN. Customers can choose to link to the VPN via Ethernet, ATM, ADSL, leased line, Public Switched Telephone Network, or ISDN. FairPrice chose to use Bizlink (an ADSL connection) for its stores to access the VPN, and Megalink to connect headquarters to SingTel's VPN.
Besides connectivity, SingTel Meg@POP also offers access to the Internet, applications and Singapore ONE, all over a single port.
ADSL is a broadband technology that SingTel brands as SingTel Magix in its consumer broadband offering. It sends data using the existing copper telephone lines. ADSL supports data rates of from 1.5Mbps to 9Mbps when receiving data (known as the downstream rate) and from 16Kbps to 640Kbps when sending data (known as the upstream rate).
ATM is a network technology that allows even faster delivery of data. Speeds on ATM can reach up to a staggering 10Gbps.
As the FairPrice example shows, broadband isn't just about doing things
faster. Broadband is a foundation on which to build applications that can make businesses more efficient. Deployed well, it can make the cash register ring.